BBR Holdings has proposed to acquire a 49% stake in JSCL Investments for a consideration of $14.3 million.
A sale and purchase agreement (SPA) was entered into between Tuckman and BBR Holdings KJ5 ’ wholly-owned subsidiary, Alika Kaki Bukit Holdings, on March 29. Tuckman owns 100% of the shares in JSCL.
JSCL is the owner of Homestay Lodge, a dormitory located at Kaki Bukit Avenue 3 Singapore. The dormitory is under the terms of two leases issued by the JTC Corporation. Each lease has a term of 30 years commencing from July 1, 1999. The dormitory has a gross floor area (GFA) of 328,415 sq ft and comprises six 8-storey blocks and one 7-storey block of workforce housing. It also has a single-story block that houses the supermarket and communal cooking facilities.
In connection with the SPA, both parties have entered into a shareholders' agreement to govern their respective rights and obligations, and regulate their relationship as JSCL’s shareholders.
Alika Kaki Bukit Holdings, as well as JSCL, have also entered into a management services agreement where JSCL will appoint Alika Kaki Bukit Holdings to supervise, manage and liaise with the third-party operator on JSCL’s behalf. The operator will provide asset management and property management services for the dormitory.
According to BBR Holdings, the company intends to diversify its business and expand its existing core business to include owning, developing, constructing, managing and operating dormitories, purpose-build workers' accommodation, student accommodation and other similar accommodation assets.
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The move is subject to the approval of BBR’s shareholders at an extraordinary general meeting (EGM).
As at April 1, JSCL has an issued and paid-up share capital of $19.0 million comprising 18.24 million shares. Based on its financial statements for the FY2023 ended Dec 31, 2023, both the net book value and net tangible asset value of its shares stood at the same amount of $44.6 million. Earnings attributable to the sale shares for the year was $3.3 million.
After adjusting for the amount of cash held by Tuckman that is in excess of the target net cash of $4.5 million and the discharge of the loan amount that JSCL owes Tuckman, the shares’ adjusted net book value and net tangible asset value is at $23.3 million.
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The acquisition is expected to be completed on June 5.
Alika Kaki Bukit Holdings is expected to pay a total of $24.3 million, including the base purchase consideration, the loan amount and security in respect of the bank facilities agreement between Maybank and JSCL. The total consideration will be funded internally.
On a pro forma basis, the transaction is expected to be accretive to BBR’s net asset value (NAV) per share and earnings per share (EPS). Had the transaction been completed on Dec 31, 2032, BBR’s NAV per share would’ve been at 35.14 cents compared to its actual NAV of 32.62 cents. Its EPS would have been at 5.84 cents from its actual EPS of 1.98 cents if the proposed transaction had been completed on Jan 1, 2023.
As at 10.35am, shares in BBR Holdings are trading flat at 11.5 cents.
